'University for Industry' failed to attract private cash

An ambitious government e-learning initiative which has cost the taxpayer £1bn is struggling to attract private investment as it awaits the result of a value-for-money review by the National Audit Office.

Launched as the "University for Industry", UfI runs learndirect, a huge online learning scheme to attract adults and young people into education and training to improve their job opportunities. It claims to be the second largest learning organisation in the world.

The programme was supposed to attract private investment and earn an increasing part of its income from students and businesses but its launch in 2000 was followed a year later by the collapse of the government's Individual Learning Accounts (ILA) initiative amidst widespread fraud, removing an expected income source.

In 2003, UfI generated £27m from the sale of learning materials, but just £995,018 came from businesses and individuals, reported Computer magazine. It added that UfI 2, a separate business established to generate income from private sector contracts, failed to achieve its objective of attracting commercial investment.

Coming after the crash of two other high-profile education initiatives - the e-university (known as UKeU) and the NHS "university" - any difficulties experienced by UfI/learndirect would come as an embarrassment to ministers.

The National Audit Office is currently carrying out a routine review of UfI's value for money and will publish its report next year. Since April 2000, Ufi has supported 1.4 million learners, but only 65% of students completed their courses.

Pablo Lloyd, acting chief executive of learndirect, said the organisation had consistently hit its financial targets and cut overheads by 20% this year. He was confident the NAO would find it gives value for money.

A typical learner undertakes two 11-hour courses at a cost to the taxpayer of £360, according to Mr Lloyd. About half of all courses are in IT, with the rest divided between business courses and basic literacy and numeracy. Learners enroll at the 2,000 learndirect centres in colleges, community organisations and workplaces.

Asked about private investment, Mr Lloyd admitted UfI had not met its original aspirations. "But we have never placed significant reliance on private investment. We have always stayed within our public spending budgets every year - we have maintained a robust financial base."

Mr Lloyd said learndirect planned to charge smaller businesses more for courses now that their consistent high quality had been established. He added that the collapse of ILAs had not dented the steady rise of learner numbers.

Liberal Democrat MP Paul Holmes, a member of the education and skills committee investigating UKeU, said there were obvious parallels between Ufi and the failed initiative to sell online degrees worldwide.

"Having looked into what a shambles UKeU was - and the difference between predictions and reality - alarm bells should be ringing and questions should be asked if private finance is not being raised," he told Computer.